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The People’s National Congress Reform (PNCR) calls on the Government to clarify for the benefit of the public whether or not Exxon is charging interests on its investments in the Stabroek Block and, if so, at what interest rate. The party, in a statement said, the reluctance of Vice President Bharrat Jagdeo to fully disclose information on this matter has gone beyond eye pass. “It is more than likely that he himself is not on top of the situation and, worse, does not care to be.”
The matter of interest payments can potentially amount to billions of USD in revenue leakages. This is because, given the many tens of billions of USD involved in developing our oil fields, an interest rate of even 5% would result in a huge expense. These monies could instead be used to alleviate the cost of living crisis, raise salaries, eradicate poverty and meet many other urgent needs. His disdain for his responsibilities as the PPP’s oil autocrat thus represents an assault on the well-being of every Guyanese.
For the public’s benefit, the PNCR is explaining its concerns:-
“According to Annex C in the 2016 PSA, interest expenses are recoverable without the approval of the minister, so long as they are “consistent with market rates.”
“However, the first Exxon audit, commissioned by the Coalition Government, explicitly declares on page 4 that the company did not recover any interest expenses. To quote: “interest and financing costs are recoverable under the 2016 PSA. However, EEPGL confirmed during the audit period that no interest or financing charges have been included in cost recovery- the audit team has confirmed that no interest or financing costs are included in the amount presented in the Q4 2017 cost recovery statement.” Such an explicit and direct statement is however missing in the second Exxon Audit, commissioned by the PPP to cover USD7.3B in the 2018-2020 period.
“What Jagdeo seems not to grasp (or cares not to) is that because the PSA allows interest expenses to be recoverable without the approval of the minister, any audit that lacks necessary thoroughness will not automatically flag them when they appear in the cost recovery bank. When the Stabroek Block operator says Guyana is not being charged interest on developments, therefore, an audit which follows the letter of the PSA may not directly reveal whether or not this is the case. As a result, it is, at minimum, incumbent upon the government of Guyana to monitor quarterly expense reports to identify whether interest is being charged and to raise this issue with the operator if it is not living up to its word.”
The party said while the audit commissioned by the A Partnership of National Unity and Alliance For Change (APNU+AFC) coalition government specifically addresses the interest issue (highlighting that interest was not charged for pre-contract costs) the one done under the People’s Progressive Party (PPP) government makes no such direct reference to interest. “Rather, in addressing the issue of withholding tax (Exception 17), it tangentially suggests that interest is being charged. This raises several questions, chief among them is whether this is indeed the case, what the interest rate is, and how it compares with market rates.”
According to the party, much effort is not required for the matter to be clarified by the government and the people of Guyana deserves to know because billions of USD of the national patrimony are at stake.
The Party said “going forward, auditors must be instructed to look closely at the issue of interest and provide detailed and specific commentary. The government must also keep a close eye on expense reports to note any interest charges. If interest is indeed being charged, they must engage the Operator for the recovery of these funds, and report this to the nation.”
Intensifying its criticism of the secrecy surrounding the management of Guyana’s wealth the PNCR said the government cannot afford to continue blindly when so much is at stake nor must Jagdeo be allowed to squander our oil revenues through irresponsibility, naivety and stupidity.
